Difference bw Mortgage and Charge In case of
Difference b/w Mortgage and Charge
• In case of charge, there is no transfer of any interest in the property in favour of charge holder, as in the case of mortgage. • A charge if merely a security for payment of money to be enforced against the property charged. • As a general rule, a charge cannot be enforced against transferee for consideration without notice.
Points to Remember • 1. A charge and a mortgage are alike in one respect that they both serve as a security for the payment of money. • 2. A mortgage is a security for the payment of money in form of a debt whereas a charge is a security for the payment of money, such money may or may not be a debt. There may be a covenant to pay in a mortgage but no so in a charge. The creation of a charge does not necessarily imply the existence of a debt but a mortgage does.
• 3. A mortgage may be a security for the performance of an engagement giving rise to a pecuniary liability but that is not the case with a charge. • 4. A charge does not operate to transfer to the charge holder any interest in specific property as a mortgage does. It merely gives the charge holder the right to have a claim satisfied out of a particular property without transferring the property or any right within to him. Charge functions like Simple Mortgage as there is personal liability of the charge holder to pay.
• A mortgage must be executed in respect of a specified property; but a charge may be created upon the wealth and property of a person. • A mortgage can only be made by act of parties; whereas a charge may arise either by act of parties or by operation of law. • A mortgage gives right in rem but a charge does not create any such right. • A charge is not subject to redemption or foreclosure like mortgage.
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